Elon Musk has ‘super bad feeling’ about the economy

What happened?

Tesla CEO Elon Musk was reported by Reuters as saying that he has a “super bad feeling” about the US economy, and wants to cut about 10% of jobs at the electric car maker. 

This caused Tesla’s share price to crash 9.2% on Friday, weighing down on the NASDAQ index and Cathie Wood’s flagship ARKK fund. 

What does this mean?

Tesla hires about 99,000 staff worldwide in its electric vehicle factories in the United States, China and Germany. Cutting 10% of jobs would represent about 10,000 job losses. 

The job cuts come as a surprise to many as demand for Tesla cars remains strong despite rising concerns of a recession. 

In the first quarter alone, Tesla delivered over 310,000 vehicles, increasing from close to 185,000 vehicles delivered in the same quarter last year. 

The growth in production was applauded as it came through despite supply chain constraints and shutdowns at its factory in China. 

Why should we care?

Recession concerns

Musk’s warning is the most high-profile amongst several business leaders who have warned of recession risks in recent weeks. 

Earlier in the week, Jamie Dimon, CEO of JP Morgan, said that “you better brace yourself” as a “hurricane is right out there down the road coming our way”. 

As the leader of the largest bank in the US, Dimon’s cautious outlook definitely made many sit up to evaluate the economic risks ahead.

Tesla’s potential job cuts come at the back of much gloom across the tech sector. 

This week alone, US’ largest crypto exchange Coinbase said that it would extend its hiring freeze for the foreseeable future.  

Fellow crypto exchange Gemini Trust told its staff that it would be cutting the company’s workforce by 10%. 

Looks like we’ll continue to have to keep a close look out on the direction of the economy and whether we are headed into a recession!